Many states have regulated the maximum APR for payday loans, which is a good thing – but don’t think that it’s only going to be something like 10! A short term loan often has high APR.

What’s APR?

Some people don’t know what APR is, or what payday loan APR is – or if it’s different at all.

APR stands for Annual Percentage Rate, which is basically the annual interest rate on the loan itself. With large loans, like a home loan, or small business loan, the APR is usually very low, mostly because the loan is paid back over a long period of time.

However, with Payday Loan APR, it works a little differently.

How Does Payday Loan APR Work?

Payday loan APR is a much, much bigger number than a home loan APR is – it has the highest interest rates on any sort of loan, but that’s because it is a very short term loan. Usually between 7 and 14 days, these loans don’t span much at all – so you usually end up only paying between $10-$40 in interest.

You can normally find APR numbers between 250% – 390%, which is rather large, until you consider that you’re borrowing just a small amount, and you’re going to pay it back quickly.

Some states have regulated the highest possible APR that payday loan companies are allowed to use, along with other things – like how long a loan can be out, and if you can renew it or extend it in any way. These laws vary wildly – while some states have very strict laws, some have none at all.

When Searching for a Payday Loan…

When searching for a payday loan APR should be something that you keep at the top of your head. The lower the APR, less that you have to pay when you’re going to pay back your loan.

Watch out for fees, too – while the APR might look attractive at first glance, finance fees will end up costing you twice what you’re paying in interest. Keep your eye out for the best companies that offer the lowest fees, and interest rates.

Remember…

Remember to borrow wisely, and don’t go with a company that has too high of a payday loan APR – you’ll feel the crunch later!

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